Pékin propose d'ores et déjà une alternative au système financier international, dominé par le dollar américain et les institutions de Bretton Woods. Mais de nombreuses fragilités structurelles du ...système financier chinois empêchent pour le moment le renminbi de détrôner réellement le billet vert.
In June 2018, the People's Bank of China (PBoC) decided to include green financial bonds into the pool of assets eligible as collateral for its Medium Term Lending Facility (MLF). The PBoC also gave ...green financial bonds a 'first-among-equals' status. We measure the impact of the policy on the yield spread between green and non-green bonds. Using a difference-in-differences approach, we show that the policy increased the spread by 46 basis points. Our approach differs from the literature in that we match bonds under review with non-green bonds with similar characteristics and issued by the same firm, which allows for highly relevant firm fixed effects. We also specifically investigate the impact on green bonds. The granularity of the data (daily) also allows us to conduct a dynamic analysis by dividing the sample into weekly, monthly and quarterly observations. Our results also show that the impact of the reform starts to materialize after three weeks, has a maximum effect after three months, and has a persistent effect over six months.
Key policy insights
The PBoC was one of the first central banks to have a policy specifically targeting green bonds in 2018.
Including green financial bonds as collateral for monetary policy increased the spread by 46 basis points compared to before the policy reform.
These findings show that a central bank can actively influence market rates for green projects compared with non-green projects by accepting green bonds into the pool of eligible collateral and that giving them preferential status.
It is especially relevant for countries with shallow bond markets to help develop nascent green bond markets, as was the case in China before the reform studied here.
Abstract It is widely assumed that the renminbi (RMB) cannot acquire a meaningful place in central bank reserve portfolios without full liberalization of China's capital account. We argue that the ...RMB can in fact develop into an international reserve currency in the absence of capital‐account convertibility. Trade and investment links can drive use despite limited access to Chinese financial markets. But this route to currency internationalization requires policy support. China must provide access to RMB through loans and the People's Bank of China (PBoC) currency swaps. It must ensure the convertibility of RMB into US dollars in offshore markets. It must provide RMB services at a stable and predictable price. Currency internationalization without full capital‐account liberalization thus requires the RMB to be backed by dollar reserves, which the PBoC consequently will continue to hold and use. Hence, we do not foresee RMB internationalization as supplanting dollar dominance.
In June 2018, the People’s Bank of China (PBoC) decided to include green financial bonds into the pool of assets eligible as collateral for its Medium Term Lending Facility. The PBoC also gave green ...financial bonds a “first-among-equals” status. We measure the impact of the policy on the yield spread between green and non-green bonds. We show that pre-reform trends are minor, meaning that both green and non-green bonds yields evolved similarily at the time of the reform. Using a difference-in-differences approach, we show that the policy increased the spread by 46 basis points. Our approach differs from the literature in that we match bonds under review with non-green bonds with similar characteristics and issued by the same firm, which improves the relevance of firm fixed-effects. We also specifically investigate the impact on green bonds. The granularity of the data (daily) also allows us to conduct a dynamic analysis by dividing the sample into weekly, monthly and quarterly observations. Our results also show that the impact of the reform starts to materialize after three weeks, has a maximum effect after three months, and has a persistent effect over six months.
In June 2018, the People’s Bank of China (PBoC) decided to include green financial bonds into the pool of assets eligible as collateral for its Medium Term Lending Facility. We measure the impact of ...the policy on the yield spread between green and non-green bonds, or greenium. Using a difference-in-differences approach to compare pairs of green and non-green bonds issued by the same institutions, we show that the policy increased the greenium by 46 basis points. This experience can be useful to other central banks considering similar polices.
